Rising to the second position, but foreign direct investment (FDI) in real estate continues to decline.
Foreign direct investment (FDI) inflows into the Vietnamese real estate market remain the second position in attracting FDI with over 1.76 billion USD, accounting for more than 9.7% of the total registered investment capital.
According to statistics from the General Statistics Office (Ministry of Planning and Investment), as of the end of August 2023, in the foreign capital (FDI) flowing into the Vietnamese real estate market, the real estate business sector continues to hold the second position in attracting FDI with over 1.76 billion USD, accounting for more than 9.7% of the total registered investment capital.
However, compared to the same period last year, this number has still decreased by 47.2%. Previously, in the first 7 months of 2023, foreign investors poured 1.61 billion USD into the Vietnamese real estate market, and this business sector was ranked third in attracting FDI. Therefore, after 8 months, despite the improvement in ranking to the second position, attracting FDI into the real estate sector continues to decline, falling short of expectations.
A survey by the Vietnam Association of Realtors (VARS) shows that many foreign investors are still interested in domestic real estate projects from the beginning of this year. The goal of foreign investors is to target projects with completed legal procedures.
In reality, there have been some mergers and acquisitions (M&A) involving well-known foreign companies such as Keppel Land, Frasers, WHA, Central Retail… The predominant method of buying and transferring is still processed through the acquisition of project company shares. Notably, some deals have involved separating project companies for foreign partners to purchase outright. This is also the preferred method chosen by foreign partners.
Experts assess that in the real estate sector, the industrial segment remains a “bright spot” with stable FDI inflows. This segment acts as a magnet for investment.
With the goal of attracting the influx of FDI into Vietnam, the demand for industrial land leasing continues to thrive in 2023, despite the general challenges in the real estate market, especially as old industrial hubs gradually fill up, leading to rising rental prices, and new supply with large land areas is limited.
A prominent example is Sumitomo Group’s announcement of a $400 million industrial park development plan in Thanh Hoa, ever since as early as of July 2023. Additionally, Foxconn has been approved to invest $246 million in new manufacturing plants in Quang Ninh. Notably, the approval process for Foxconn’s investment was handled online in just 12 hours, a significant improvement from the previous 14-day procedure.
Commenting on this event, Mr. Tyler Nguyen, Director of the Institutional Client Division of Maybank Investment Bank, noted that the approval demonstrates the government’s readiness to implement advanced technology to streamline legal procedures. The prospects for FDI in Vietnam will remain bright not only in the last months of this year but also in 2024 and beyond.
According to Ms. Trang Bui, CEO of Cushman & Wakefield Vietnam, to continue maintaining the advantage of attracting investment, northern provinces have been rushing to complete and announce comprehensive development plans and directions to prepare for “eagle-catching.” Investors are also accelerating legal procedures and construction progress. As a result, the supply of industrial land in the 2023-2026 period is expected to increase significantly, reaching nearly 5,000 hectares.
However, in the overall market evaluation, experts believe that there are still many challenges for investors in finding high-quality opportunities. Despite the availability of assets being divested, the portfolio of projects that foreign investors can invest in is quite limited, mainly due to legal constraints.
Therefore, with the support of government policies and the participation of government agencies, local authorities, and the relevant sectors, the obstacles faced by a series of real estate projects will continue to be resolved. This will create momentum to promote the development of the real estate market and increase its attractiveness to foreign investors.
Source: vtv.vn
